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MPs demand Help to Buy exit strategy

11/02/2014

Eight out of 10 MPs want the Government to set out an exit strategy for the Help to Buy Mortgage Guarantee Scheme to ensure it ends in 2017 as planned.

MPs from across the political spectrum think called for a strategy for an orderly exit to prevent the scheme from becoming a permanent feature of the mortgage market.

The survey, commissioned by mortgage insurance provider Genworth, showed that 51% of MPs support the involvement of private sector insurance to facilitate an orderly exit, instead of the taxpayer.

Some 52% thought there was a risk that the scheme would become permanent.

Eight out of 10 Conservative MPs felt the scheme would help increase house building, while only one in four Labour MPs felt the same way.

Some 72% of MPs were concerned about the impact on the taxpayer if the Government guarantee was significantly called upon and 66% were worried about the scheme's £12 billion contingent liability.

Angel Mas, president, mortgage insurance Europe, at Genworth, said the second phase of Help to Buy has boosted competition in the mortgage market for those with low deposits.

“The Government should start thinking about its exit strategy now. Just turning off the high loan-to-value (LTV) mortgage finance tap at the end of 2016 will risk a cliff since the issues that led to the introduction of Help to Buy 1 and 2 have not gone away.

"Access for first-time buyers to prudent high-LTV mortgage finance will remain the lifeblood of a healthy mortgage market.

"There is optimism that the scheme will facilitate house building, but as Morgan Stanley has already indicated, house builders make investment decisions 12 to 18 months in advance, which requires a clear picture of what will happen to high LTV mortgage lending after 2016.

"There is consensus that the scheme should not be permanent, and over half of MPs see a potential role for the private insurance sector in replacing the Government and minimising risk to the taxpayer.

"We believe private involvement should be gradual and phased in through the life of the scheme.”

The research also showed that eight out of 10 Labour MPs think Help to Buy is likely to increase house prices, compared to just over half of Conservative MPs.